On June 24, 2021, following months of negotiations, President Biden and Vice President Harris announced their support for a $1.2 trillion bipartisan framework for infrastructure investment. The $1.2 trillion plan calls for $579 billion in new spending to improve the nation’s roads, bridges, rail systems, broadband Internet access, water and power infrastructure, public transit, and climate change resiliency (among other items). However, as discussed below, significant uncertainty remains for the announced framework to become final.
The Announced Bipartisan Framework
A White House fact sheet outlining the bipartisan framework touts that the framework “makes transformational and historic investments in clean transportation infrastructure, clean water infrastructure, universal broadband infrastructure, clean power infrastructure, remediation of legacy pollution, and resilience to the changing climate.” The announced bipartisan framework is one of the most noteworthy single infrastructure investments in U.S. history. For example, according to the White House, the framework represents the single largest dedicated bridge investment since the construction of the interstate highway system. Among other goals, the plan will build a national network of electric vehicle chargers along highways and in rural and disadvantaged communities to accomplish the President’s goal of building 500,000 electric vehicle chargers. The framework also calls for the creation of a new financing authority to leverage billions of dollars of private capital into clean energy and clean transportation projects.
Below is a summary of the categories and dedicated amounts contained in the announced bipartisan framework:
According to the White House, the announced framework will be financed through a combination of measures, including but not limited to reducing the IRS tax gap; redirecting unused unemployment insurance relief funds; repurposing unspent 2020 emergency relief funds; targeted corporate user fees; public-private partnerships, private activity bonds, direct pay bonds and asset recycling; and the macroeconomic impact of infrastructure investment.
Why This Matters
The announced bipartisan framework presents intriguing opportunities for various entities involved in the infrastructure space. In particular, companies and government agencies involved in public-private partnerships; major engineering, procurement and construction projects; and related project financing should pay very close attention to these ongoing developments. In addition, alternative energy producers (including wind, solar, hydrogen and storage), electric vehicle manufacturers, charging infrastructure companies and battery manufacturers will have a tremendous stake in the legislative outcomes.
Next Steps
While the White House has announced its support for the bipartisan framework, some Democrats will continue pushing for a broader, more aggressive package focusing on such issues as child care, education, health care and climate change through the budget reconciliation process. Republican support for the bipartisan package is also uncertain, as only five Republicans have so far publicly signed on whereas a minimum of ten Republican votes will be required to prevent a filibuster. Some Democrats have signaled that they will not support the bipartisan plan without assurances that the separate budget reconciliation package (which does not require Republican votes) will be enacted simultaneously, and some Republicans have signaled that they will withdraw their support for the bipartisan package if it is linked to the reconciliation package. Consequently, there remains a high degree of uncertainty as to the final form of any new federal commitment to our nation’s urgent infrastructure needs.
Manatt will continue monitoring these developments.
